2015 Best Practices Study

Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000

Key Benchmarks Profile

Profit/Loss Summary

Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Average

Top 25% Profit Top 25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

50.8%

50.3%

44.6%

Bonds

1.0%

0.6%

0.8%

Personal Lines

15.2%

13.9%

23.4%

VAS - P&C

0.6% 6.6%

0.6% 5.8%

0.7% 5.2%

Contingent/Bonus Group Medical All Other Group Bonus/Overrides Investments Miscellaneous Total Revenues Individual Life & Health

14.5%

16.9%

11.6%

5.1% 2.9% 1.5% 0.8% 0.9%

3.7% 5.1% 2.7% 0.3% 0.1%

3.5% 4.9% 1.8% 1.4% 2.0%

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.7%

0.6%

1.2%

NET REVENUES

98.3%

99.4%

98.8%

Expenses (as % of Net Revenues) Compensation

62.8%

57.7%

59.7%

Selling

3.1%

2.9%

3.5%

Operating

13.8%

13.6%

12.8%

Administrative

3.0%

0.5%

3.9%

TOTAL EXPENSES

82.8%

74.6%

80.0%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

17.2% 20.2%

25.4% 30.1% 18.3% 26.4% 31.1%

20.0% 20.9% 13.7% 22.0% 22.9%

Pro Forma Pre-Tax Profit 1 Operating Pre-Tax Profit 2

9.5%

EBITDA 3

20.0% 23.0%

2015 Best Practices Study

Pro Forma EBITDA 4

1 Pre-tax Profit if discretionary expenses are eliminated and all owners compensated as employees

2 Pre-tax Profit excluding contingents, bonus and investment income

3 EBITDA—Earnings Before Interest, Taxes, Depreciation and Amortization

4 EBITDA if discretionary expenses are eliminated and all owners compensated as employees

Agencies with Revenues Between $10,000,000 and $25,000,000

118

Note: See page 163 for an explanation of column headings